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Apple’s unholy compromises in China

May 18, 2021, 5:15 PM UTC

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Apple—the world’s most valuable company and self-styled privacy vanguard against the encroachments of Big Tech—is capitulating to the demands of the Chinese government in order to preserve its lucrative business there.

The New York Times yesterday published a meaty investigation into Apple’s Beijing-placating data policies. After a Chinese cybersecurity law came into effect in 2017, Apple started storing customer iCloud data—spanning emails, contacts, photos, and geolocation—on computer servers in China and handled by Chinese state employees. The iPhone-maker is also aggressively and proactively censoring apps and other content that might displease Chinese regulators in the Chinese version of its App Store.

Some of the details of the story are technical, but they are critical to understanding the costs of doing business in China. One issue concerns iCloud encryption keys, the password-like codes that protect people’s cloud-hosted data from prying eyes. Originally, the keys were stored abroad, but eventually Apple was forced to house the keys inside China, the Times reports. The move potentially makes it easier for the Chinese government to access people’s Apple data.

Another (star-studded) red flag: Apple recently tweaked its user agreement to give a third party—Guizhou-Cloud Big Data, or GCBD—legal ownership of Chinese customers’ iCloud data. The arrangement is effectively “a legal shield from American law,” which could otherwise prevent Apple from handing over sensitive data to the Chinese government, the newspaper reports.

One fascinating point highlighted by Matthew Green, a cryptography professor at Johns Hopkins University, involves a technical stipulation by Beijing. China apparently insisted that Apple not use its ordinary equipment for protecting encryption keys: hardware security modules developed by the French company Thales. The devices are standard across the cybersecurity industry.

The proviso raises an obvious question: Why doesn’t China allow Thales’s tech? Is it because China believes the company’s modules aren’t safe and secure enough, implying that hackers and spies can potentially undermine them? Or is it because the equipment is deemed too safe and secure, meaning the Chinese government believes it is too difficult to break into them to extract secrets? Or, could this just be a bit of techno-nationalism, a general rejection of tech designed by a foreign firm and generally embraced by the western world? (Although, why, then, allow Apple to operate in China in the first place?)

The answers are unclear, but the Times leans heavily toward option No. 2. The story notes that Apple’s solution involved whipping up its own key-storing device using a combination of old iOS software and low-cost Apple TV hardware. Cybersecurity researchers regard China as a haven for iPhone “jailbreakers,” hackers who specialize in burrowing deep into the innards of Apple’s software, suggesting China sought to break into these new key-containers.

Apple, for its part, contends that it has not weakened security abroad and that it is merely trying to create “the best user experience without violating the rules we are obligated to follow.” The company said in a statement published by the Times that it “never compromised the security of our users or their data in China or anywhere we operate.” The firm added that its Chinese data centers “feature our very latest and most sophisticated protections.”

China accounts for $55 billion worth of Apple’s revenues, a fifth of the company’s worldwide total. That’s a significant chunk of Apple’s business—a share the company will, as any capitalist enterprise would, fight to protect and grow. And that means it must play by Beijing’s rules.

Robert Hackett
Twitter: @rhhackett


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